IUP sets sights on budget picture

Indiana University of Pennsylvania officials have capped this academic year, put the budget to rest for the next year, and now are looking ahead to the two that follow.

And in those years, 2015-16 and 2016-17, officials are seeing budget deficits. But instead of cutting expenses to make ends meet, IUP President Mike Driscoll is proposing that the university boost its income, mostly through tuition dollars, but partly through future fee increases.

“While some additional cuts may be needed in the near future, large-scale program reductions and other drastic cost-cutting measures will harm morale and ultimately lead to a downward spiral in revenue,” Driscoll said in a statement.

“Generating increased net revenue, not further budget cutting, is the key to meeting IUP’s mission and achieving the aspirations of our shared vision for IUP’s future,” he said.

Based on certain assumptions, officials are estimating there will be a cumulative deficit of $7.2 million in 2015-16 and $4.7 million in 2016-17. The 2014-15 budget also had a deficit, but officials were able to plug it.

So to cover the gaps, Driscoll is proposing a three-part revenue plan. The details still need to be hashed out, but a major part of it involves setting revenue goals for IUP’s academic units, something Driscoll said he believes hasn’t been done before.

Under that piece of the plan, the expectation would be that the academic departments and colleges will meet the goals through offering services and programs people will pay for, either entirely new ones or improved versions of existing ones.

“It is … clear that the best way to increase revenue is to provide innovative, high-quality programs that are responsive to the needs of society and students by refreshing existing programs and developing new ones,” Driscoll said in the statement.

Driscoll said that increasing revenue by a few percent without greatly increasing expenses will significantly increase net revenue.

To get there, he’s proposing to offer seed money for the development of new programs or enhancement of existing ones. And as an extra incentive, he’s promising to return a goodly portion — but not all — of the gains to the departments and colleges that generated them.

However, the plan may require some reshuffling of resources with departments, divisions and colleges, and those sort of moves usually tend to create friction. But still, that’s better than asking for the broad, universitywide cuts that IUP has been making, Driscoll said.

As for the second part of the plan, it relies on “modest” increases in the relatively new student services fee.

The fee is a per-credit surcharge that, as of the beginning of 2014-15, will stand at $15 for each undergraduate credit and $12 for each graduate credit.

Compared to other fees, it’s small, but it adds up. Undergraduate students need a minimum of 120 credits to graduate, and at the current rate, the fee adds $1,800 to the cost of a four-year education. One semester’s tuition for full-time Pennsylvania undergraduates is $3,311.

Driscoll said that by modest increases, he means $2 or $3 extra at a time. And he said he looks for increases in the fee to be more of a budget filler rather than a major revenue generator. In 2014-15, the fee is projected to generate nearly $5 million. The university has an operating budget of around $211 million.

Although IUP has to be careful that it doesn’t overburden students, he said, the reality is that with flat or declining state subsidies, students are going to have to shoulder a greater share of the cost of their education.

The third part of the plan is probably the simplest — a change in accounting policy.

Currently, IUP builds budgets on the assumption that all jobs are filled all of the time, which, of course, they aren’t. People quit. Or are fired. Or retire. As a result, it’s setting aside money for paychecks that may not be written.

“This means that we can reduce the amount of money allocated for personnel expenses without reducing the number of employees,” Driscoll said. “By budgeting closer to actual expenditures, we can take advantage of the difference as we transition to a sustainable financial model.”

He said the same idea also applies to divisional operating budgets. Driscoll pointed out that in the last five years, operational carryover, amounts set aside but not spent, has increased from $2.3 million to $7.9 million.

When the Super Heroes Circus comes to the Kovalchick Convention and Athletic Complex Thursday through Sunday, it will be led by David Shipman, at age 27 the third-youngest ringmaster in the 145-year history of the Ringling Bros. and Barnum & Bailey Circus.

“To be the third youngest, to me, is quite an honor,” Shipman said. “Traditionally the ringmaster was older, with a deep